Investing Books

I was asked by a friend yesterday for books to help them learn about investing. Below is a list of books that I have read that helped to shape my thinking. Most of these are pretty easy to read if you are at all interested in investing.

The Five Rules for Successful Stock Investing – Dorsey

Take Stock – Ellis Traub (excellent book on picking individual stocks)

A Random Walk Down Wall Street – Malkiel (one of the first that I read and it has been updated recently)

The Four Pillars of Investing-Bernstein (this one is guiding most of my investing right now)

The Future for Investors – Siegel

Winning the Investment Marathon – H Bradlee Perry

Common Sense on Mutual Funds-Bogle

Lowell Herr does a significant amount of writing and blogging about investing and has a list of his five favorite asset allocation books.

... and the verdict is in

The trial is over and the defendant was found guilty of DUI.

In my mind it was a pretty open and shut case and the defendant wasted money taking it to court. I almost believe that she had more than one arrest and was just grasping at straws trying for a not guilty verdict.

We only had to deliberate for 30 minutes and most of the that, IMO, was people discussing their logic because they felt bad about the guilty verdict.

Again, the trial took too long but our system is still the best one around.

Jury Duty

I've been on jury duty this week. Today I had to actually go to the court house and I ended up getting selected to sit on a trial. It has been an interesting and boring process, all at the same time. I can't talk about the trail - it's still going on but I will describe the process.

About 40 folks showed up at 8am (as we had been instructed). We signed in and then sat for more than an hour waiting for something to happen. At this point I was glad that I had brought 3 magazines with me. Shortly after 9am we were all brought into a courtroom and eighteen of us (me included) were called to the jury box where voir dire started.

This is the process where the judge and both sets of attorneys ask questions to make sure the jurors are unbiased. Five of the jurors were eliminated for cause and three with no reason given by each of the attorneys. We then had the final twelve - me included.

Three expert witnesses have been called and the examination and cross have been just about what you see on TV - without all of the theatratics and last minute confessions on the stand. The lawyers and judge had several "side bars" and we had to go to the jury box 4 or 5 times so they could argue points of law - I guess, since we didn't get to hear them.

Interesting dynamic in the jury room. Twelve people that don't know each other thrown together in a small room with nothing in common to talk about. The only thing we have in common is the trial but we've been instructed not to talk about the trial until we begin deliberations. Therefore the jury room is real quiet.

The process seems to work - even if it moves slowly and is less than exciting most of the time. If you get called for jury duty, serve willingly and with pride.

Change for the Better

Change.

I have been reading my good friend Chris Elliott’s blog about change where he suggests that many of life’s changes are like winning the lottery. Today as I was doing a long run (only 4 miles this week) for the half marathon that I’m training for I reflected on my previous run and decided to make a change.

It was last Wednesday at 4:15. The day was cold, overcast, and the snow was coming down heavy with gusty wind. My running partner and I were running side by side facing traffic when an approaching car was very close to us. I slowed and fell in behind my partner to give the car additional space. As the driver went be he flipped us off! This is the first time anything like that has happened to me in all the years I’ve been running.

So what change am I making? When running and a car takes a courteous and safe action and moves over to give us more space I’m going to give them a friendly wave – a small reward for doing the right thing. I know it isn’t much but I’m hopeful that by expressing my appreciation the driver will remember next time and give space again.

Making the world a better place one wave at a time.

Carl prior to his first half marathon

New Floor

My wife and I decided a few weeks ago to replace the carpeting in two of our bedrooms with a laminate wood floor. We (well actually a friend and me) are doing the work to save money and because I like learning new skills. Here is how the floor looked before the installation.

After almost 12 hours of work with only one break for lunch we finished the floor. It was not harder than I thought it would be but it did take longer than anticipated. Putting the flooring in around the closets (shown above) took alot of thought and discussion to ensure we didn't make flawed cuts. We only made one wrong cut and, until we learned how to get pieces to snap together, we damaged 4 or 5 boards. Fortunately, we were able to use all of them in other spots.

I grew up in a house with hard wood floors and I hated them. Thirty plus years makes a big difference in attitude. I love the look and feel of the new floors. They are well worth the cost and effort.

Thank you, Dave, for the help. I couldn't have done it without you!

Stock Market Recovery

Recently the government confirmed that we are in a recession (2 quarters of negative growth). This has been evidenced by the housing problems, the dramatic drop in the stock market, and the rise in the unemployment rate.

So how does one know when to anticipate an increase in stock market prices? Should one wait until the signs of an improving economy are in place? The answer is NO. The stock market, in the past, recovers a full six months before the "economy" shows signs of life.

So what does this mean to the average investor? To me it says that any money you have that is earmarked for the stock market should be in the market now! No one, and I mean no one, can predict when the economy will improve. Six months, a year, two years or more, no one knows. So grit your teeth put your money in the market.

Time for Change??

Our new president ran on a ticket of "change". However, two of his Cabinet post nominees have failed to pay taxes in the past which feels to me like business as usual for politicians.

Timothy Geithner has been confirmed as Treasury Secretary which oversees the IRS and he didn't pay the taxes he owed until a couple of weeks before being nominated.

Tom Daschle paid his back taxes AFTER being nominated (he is not confirmed yet) and he owed $120,000!

Both of these cases sound like more of the same from politicians - Do as I say not as I do. What if you or I didn't pay our taxes when they were due? We'd most likely be put in jail. These two get by with paying the tax and saying "I'm sorry, it was a mistake."

If our new president had any courage and really wanted change he would withdraw the nomination of Daschle (whom he still supports) and nominate someone who at least pays their taxes on time.

How recency hurts investors

I"m currently reading "The Intelligent Asset Allocator" by William Bernstein and a comment he makes in the book is especially true given today's market.

"... but this [making investment decisions based primarily upon current market conditions] is a perfect example of so-called recency, the single biggest mistake that even the most experienced investors make. This referes to our tendency to extrapolate recent trends indefinitely into the future."

I've spoken to a number of folks concerned about today's weak stock market and they are considering pulling all of their money out of the market and putting it in something "safe". They are falling victim to recency by thinking that the weak market will extend forever into the future. Most investors, especially those that are not close to retirement, should be doing the exact opposite. They should be putting money IN the market now. To sell now they are buying HIGH and selling LOW - not a way to retire comfortably.
Picture taken by Lori Fisher in Estes Park, CO